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December 8, 2010

Morgan Stanley Sells Stake in Chinese Investment Bank

The new owners include TPG Capital, which owns about 32% of LPL Financial, as well as KKR.

Morgan Stanley (MS) said Wednesday that it received all regulatory approvals for the sale of its 34.3% stake in China International Capital Corp. (CICC), China’s first investment bank.

The new owners are TPG Capital, which owns about 32% of LPL Financial, as well as KKR, the Government of Singapore Investment Corp. and the Great Eastern Life Assurance Co.

Morgan Stanley said it expects to realize a pre-tax gain of about $700 million from the deal, which should close by year-end.

“We are proud of our history and successful track record in China,” said Morgan Stanley President and CEO James P. Gorman, in a press release. “This includes our long partnership with CICC, which made us the first foreign securities firm to have a major stake in a China-based joint venture investment bank.”

CICC is now led by Levin Zhu, who is the son of the former Chinese Premier Zhu Rongji.

Morgan Stanley, China Construction Bank and several other Chinese and international financial organizations jointly established CICC in 1995, when Morgan Stanley invested some $35 million in the deal, according to a Bloomberg report, and tried to sell its stake in CICC in 2008.

After the deal is wrapped up, TPG and KKR are expected to each have a 10% stake in CICC.

For its part Morgan Stanley is working on a new partnership with China Fortune Securities, says Bloomberg.